As deadline looms, Obama hunts for debt deal

"I\'m confident that the Democrats and Republicans in Congress can find a way to give some ground, make some hard choices and put their shoulders to wheel to get this done for the sake of our country," the president said Saturday.

Under pressure from Obama and his Republican foes, the Democratic-led Senate scrapped its cherished week-long break for the July 4 Independence Day holiday in a bid to make progress in the seemingly stalled negotiations.

And the Republican-held House of Representatives returns from its recess on Tuesday, meaning all of the key players in the debt drama will be on hand as the president mounts what could be a final push for a deal.

"We need to work out some arrangement, quickly, before the markets start to react and American families start to feel the consequences," said Democratic Senate Majority Leader Harry Reid.

The two sides have traded public broadsides amid private negotiations on a package to trim the deficit while raising cash-strapped Washington\'s ability to borrow, averting a possible default that could trigger a fresh recession.

Reid said Senate Democrats aimed to meet Wednesday with Obama and Vice President Joe Biden and huddle Thursday with Gene Sperling, director of the White House\'s National Economic Council, along with other top aides.

It was unclear whether Republicans, who have repeatedly rejected Democratic calls for any final deal to include tax increases on the rich, would be part of either discussions with time running short to craft an accord.

"It\'s time to acknowledge that more government and higher taxes is not the answer to our problem," Republican Senator Dan Coats said in his party\'s rejoinder to Obama\'s weekly address.

The US Treasury has publicly set an August 2 deadline by which lawmakers must reach a deal, but the White House has privately been citing July 22, Democratic officials said, confirming a Wall Street Journal report.

That\'s in part because of the work that has to go into transforming any agreement into legislation and clearing any parliamentary hurdles before debating and voting.

"The White House, I think, is being very wise and careful. They say that we should not step to the edge of the cliff because we might fall off," Democratic Senator Chuck Schumer told reporters on a conference call Friday.

Both sides differ on the size of cuts tentatively agreed to thus far in the discussions, but concur that the key stumbling block has been Republican opposition to Democrats\' push for billions of dollars in tax hikes on the rich.

Republican leaders have rejected any tax increases as part of a final deal to raise the country\'s $14.29 trillion debt ceiling in the face of a US budget deficit expected to hit $1.6 trillion this year.

On Friday, two key Senate Republicans pushed Obama to make public his proposals in closed-door talks with Republican leaders and warned that "a last-minute deal, delivered under the threat of panic, will not be acceptable."

"We can surely agree that the American people deserve time to study the decisions their leaders are making on their behalf," Senators Jeff Sessions and Orrin Hatch, ranking members of the Senate Budget and Finance Committees, wrote in a letter to Obama.

Senate Democrats, led by Budget Committee Chairman Kent Conrad, planned to unveil their own budget proposal by mid-week, potentially opening up another front in the war over US borrowing.

The US ran into the debt ceiling on May 16, but has since used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations.

But by August 2, the government will have to begin withholding payments -- to bond holders, civil servants, retirees or government contractors -- if lawmakers do not raise the ceiling.

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